The Big Deal responds to Ofgem's changes to the Confidence Code

21st January 2015

The Big Deal's response to Ofgem's changes to the Confidence
Code for Price Comparison Websites

Much more needs to be done to protect
consumers

Today Ofgem has announced changes to its Confidence Code for
price comparison websites. This comes after The Big Deal published
research last year that showed that the Big Five price comparison
sites (uSwitch, Confused, MoneySupermarket, GoCompare and Compare
the Market) have all hidden the cheapest deals from users, many for
weeks on end. In response to this research the House of Commons
Energy Select Committee of MPs announced an investigation into
these sites hiding deals and their lack of transparency over
commission.

Will Hodson, co-founder of consumer collective The Big Deal,
said:

"We're pleased that Ofgem have acted on the issues we raised.
But comparison sites' delight at the new rules betrays the fact
that not much will change.

"First, the hiding of tariffs has not ended. Comparison sites
will find new questions that dupe consumers into filtering out
deals that don't earn them a commission. 79% of the public think
that they should automatically see all deals, regardless of
commission. We agree.

"Shockingly, two of the Big Five comparison sites - GoCompare
and Compare the Market - automatically filter out the deals from
suppliers that don't pay them. Crucially, these sites are not even
under the Confidence Code, so that highly dishonest practice is
likely to continue.

"Second, it is not enough for comparison sites simply to
disclose that they charge a commission. Commissions are a cost that
end up on our bills, so the public has a right to know how much
these sites charge. If comparison sites publish their commission
levels, they will be forced to compete on cost. This competition
would benefit literally every consumer in Britain."

Ofgem should ban the hiding of deals

Ofgem's changes do not force sites to automatically default to
showing all tariffs. Instead they are still allowed to ask users a
question which then filters out deals they don't make money
from.

This means price comparison sites will continue to trick users
into selecting just the tariffs they make money from. In recent
weeks uSwitch have been testing out several different versions of
this question on their site to do exactly this. See here for a list
of their different questions and screenshots of them:
https://thisisthebigdeal.com/blog/uswitch-testing-their-today-button

New Big Deal research shows that uSwitch - the biggest energy
switching site - have hidden the cheapest deal for the last 6
months. Moreover in recent weeks uSwitch have been regularly hiding
four out of the top five cheapest deals. For example, on 5th
January this cost the average consumer between £17 and £18.

Ofgem's changes don't even go as far as some sites have
voluntarily gone themselves. In the wake of The Big Deal research
two of the Big Five (MoneySupermarket and Confused) stopped hiding
deals by automatically defaulting to show all tariffs.

Martin Lewis of MoneySavingExpert has himself said that the
price comparison sites should default to showing all tariffs (BBC
Radio 5, Mon 20th October).

Public backs The Big Deal position that users should
automatically be shown all deals

Polling from Populus found that 79% think energy switching
sites should automatically ensure every user sees all tariffs
whether the site receives a commission or not. Just 7%
disagree.

Big Deal's research into hiding deals shows that different
levels of commission seriously affect advice from price comparison
websites.

Furthermore there is a direct link between intermediaries'
commissions and consumers' bills. The higher their commission, the
higher our prices.

When Big Deal asked suppliers for zero commission, we delivered
a tariff that was cheaper than anything on comparison sites.

We need transparency on the level of the comparison sites'
commissions to force comparison sites to compete. Competition
should drive down costs - and commissions are a significant cost in
the industry.

A lack of transparency around commission raises questions about
what these sites have to hide and further undermines trust in the
energy industry. Polling carried out by Populus shows that a
significant section of the public - 43% - are not aware that
switching sites charge commission.

As Tim Yeo, Chair of Energy and Climate Change Committee, said:
"It's important that there should be complete transparency. We have
at the moment a situation where there really is no trust from
consumers in dealing with energy companies and if we find that the
comparison sites, which have represented themselves as being
neutral, objective advisers to consumers, if we find they're
earning varying amounts of commission I think it's absolutely
essential that all those sites should disclose, to people who use
them, exactly how much commission they earn from any particular
transaction." (Radio 4 You and Yours, 22nd December 2014).

Public backs The Big Deal position that commissions
should be published in full

Polling from Populus found that 74% think energy switching
sites should publish in full the commission they receive. Just 5%
think it is a bad idea.

Ofgem's ban on defaulting to just those tariffs that
sites make a commission from won't affect the two biggest offenders
- GoCompare and ComparetheMarket

Ofgem have announced: "Banning a default partial view. Sites
must show all tariffs available in the market unless customers
actively choose to select to see a smaller number of tariffs."

The two major sites that do this are Go Compare and Compare the
Market.

But neither of these sites are governed by the Confidence Code
so they don't have to follow this advice. Although they work in
partnership with Energy Helpline who are accredited.

The Big Deal is a consumer collective focused on reducing
people's energy bills. We bring together tens of thousands of
consumers and use our collective buying power to create
market-leading exclusive deals.

We launched in March 2014. In just ten months we have over
40,000 members and are growing strongly. 62% of our members have
never or hardly ever switched before - these are the very people
who have been let down by the energy market. Moreover, 60% of our
members are over the age of 55 and 30% over the age of 65.

Our policy has been to cut the commission we receive in order to
get the best deal for our members. The deals we create are cheaper
than anything on comparison sites.

Our latest collective switch saved the British public £1.5
million, with an average saving of £303 per household (higher than
any other collective switch). 10% of our switchers saved over
£475.

The Big Deal charges a commission to energy companies. For its
forthcoming switch it will be charging £12.50 per fuel - £25 for a
dual fuel switcher. This compares to £80 to £100 for a dual fuel
switcher that it has been reported the Big 5 price comparison sites
charge.

Big Deal research exposes price comparison sites' dodgy
behaviour

On 20th October 2014, The Big Deal published research that showed
that the Big Five switching websites (Go Compare, Compare the
Market, MoneySupermarket, uSwitch and Confused) all hide the
cheapest deals from users because they don't get paid by energy
companies for them. The full research including over 200
screenshots taken over 13 weeks can be found at:
https://thisisthebigdeal.com/blog/research-into-price-comparison-websites